Average in ESG score, at 55/100

We review Swift Haulage’s ESG matters based on its FY23 Annual & Corporate Governance Reports, assigning an ESG score of 55 (out of 100), reflecting average performance. Swift Haulage leads in certain areas, especially its “E” initiatives, such as adopting electric prime movers with a target to procure only electric movers/trucks by 2030 and operating sustainable warehouses. However, these efforts have yet to result in reduced carbon emissions. Additionally, more focus is needed to improve on its “S” pillar. Our earnings estimates, HOLD call, and TP of MYR0.51 (based on 7.0x FY24E EV/EBITDA - 5Y peer avg) are unchanged.

Commendable progress

We commend Swift Haulage for its achievements in reducing energy and water consumption intensity, significantly increasing waste recycling rates, and improving average training hours per employee. Additionally, the company demonstrates strong support for the local supply chain, with 100% of procurement sourced locally.

Areas for improvement

Key improvement areas include carbon emissions which have been rising, lost time injury frequency rate (LTIR) which rose in FY23 due to more work- related injuries and accidents, percentage of Independent Directors on the Board which reduced in FY23. Aligning its ESG disclosure with IFRS standards would also be beneficial.

Key sustainability initiatives

Swift Haulage is Malaysia's first logistics company to adopt electric prime movers, to reduce carbon emissions through greener transportation. It also promotes eco-friendly practices by installing solar panels in warehouses, switching to battery-operated forklifts, and setting up an EV charging station for prime movers, with a goal to only procure electric trucks/ movers by 2030.

Source: Maybank Research - 13 Nov 2024